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Monday, January 20, 2003
303 Is Wyoming a colony?
Do you know what they call a place that is full of natural resources, a place where people from industrialized places come in and scoop up all the raw minerals and then ship this wealth out as fast as they can?
Such a place is called a colony.
Is Wyoming a colony? We all want believe that it isn’t, but the reality is, that by most natural resource definitions, it is.
Somehow the leaders of this state need to figure out ways to add value to our minerals on-site here.
That theme was on the minds of Gov. Dave Freudenthal and the leaders of the Legislature when they talked about improving the economy, figuring out ways to raise enough money to balance the budget and provide necessary services this past week.
Yet, you hear very little about raising mineral severance taxes from the Legislature. Isn’t that strange?
My theory is that Wyoming is blessed with a truly outstanding group of legislators. But where we really shine is that we must have the finest group of mineral company lobbyists in the history of the world. These folks are good! What they have managed to accomplish is nothing short of a miracle of persuasion.
They have managed to convince the Legislature to accept as truth a whole series of facts that the citizens of Wyoming don’t accept at all.
As I traveled around Wyoming for almost a year campaigning in the 2002 Republican gubernatorial primary, it became obvious that just about everybody thinks severance taxes could be raised on coal and other energy products.
In this case, the people have it right.
Gov. Fruedenthal suggested during his State of the State Wednesday that perhaps it is time the Legislature allowed the people of Wyoming to vote on some issues. He was specifically talking about a statewide property tax levy to pay for school construction.
I would challenge the legislature to also offer voters the opportunity to vote on increasing severance taxes. It would be amazing to see the wide gulf in thought between the people and how their elected representatives have been voting in recent years.
A few years ago, the legislature gave a huge gift to the coal industry. Its members generously dropped the severance tax on coal from 10.5 percent to 7 percent, costing the people of Wyoming about $55 million per year. This was done through the process of allowing a coal impact tax to expire.
Energy company lobbyists were successful in convincing the legislature that this extra 3.5 percent was killing them in the marketplace and that Wyoming no longer was suffering from impact from coal development.
A legislator who holds a Ph.D. in economics was skeptical about all this. Sen. Cale Case, R-Lander, managed to get a small measure passed calling for a University of Wyoming study to see if, indeed, such a decrease of 3.5 percent, made any difference in the coal companies ability to market their products.
The study’s results said that extra 3.5 percent in severance taxes made no difference, whatsoever, in the companies’ ability to sell Wyoming coal.
That is, except that the Wyoming people no longer received $55 million per year.
When you consider that 90 percent of all coal mined in Wyoming is exported out of state, well, this whole scenario makes one’s eyes glaze over.
These lobbyists are incredible. How do they do it?
The theory behind a severance tax is that this is a tax on a mineral that is being “severed” from our soil and taken out of here. These are resources that are non-renewable. This means that in other states, a cornfield or a stand of timber, can renew itself once it is harvested. But not coal. Or oil. Or natural gas. Once it’s gone, it’s gone forever. Thus, severance taxes were enacted and are still in place, no matter how small.
The severance tax on coal, for example, is 7 cents for every dollar made by the coal companies. Not exactly big bucks for the people of Wyoming.
And finally that brings me to a bill that is going to be filed this session by State Rep. Del McOmie, R-Lander.
He calls it the “carrot and stick” approach.
He wants the Legislature to impose that 3.5 percent additional severance tax back on all coal that is shipped out of state. Any coal that is used in-state would not be taxed at that rate.
McOmie feels that this might spur companies to get involved in building power plants here, which would increase property taxes and create good jobs.
You would think that a bill like this would have universal support in the Legislature, but wait till you see what happens when the lobbyists get done with it.
Nice try, Del.
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